The July 15th Couch mentioned "... July options expire this Friday and the risk is the SPY price moving higher and threatening the $138 strike price short call prior to expiration...Traders moved funds into treasury bonds and drove the TLT price higher as equities pulled back... This trend threatens the $131 strike price short call prior to expiration on Friday..."
As confirmed in the charts below the SPY and TLT are trending higher and the smart move is to play it safe and take the money off the table before these call spreads turn into losing positions on expiration day.
SPY Position Update
SPY closed at $137.37on Wednesday â€“ the July call spread is approx. $500 in the black
The June 27th Couch Potato published a July expiration SPY bear call spread
We plan on closing out this position tomorrow for an approx. $500 gain (see tables below)
As mentioned above, the S&P 500 index is up sharply and there is definitely more of a risk of the SPY going higher (versus dropping further). At this point it is not worth the risk to try extracting further gains from this trade. Unless stock prices gap substantially lower tomorrow we plan on closing out the SPY spread in the morning.
TLT Position Update ---------------------------------------------------------
TLT closed at $128.82 on Wednesday â€“ the July call spread is approx $800 in the black
The June 21st Couch Potato published a July expiration month TLT bear call spread
We plan on closing out this position tomorrow for an approx. $800 gain (see tables below)
We should enter an order to simply buy back the $131 strike price call contracts (versus doing a spread order). The $136 long call has no value to offset the fees and commissions, plus you probably won't be able to sell it anyway. Similar to the SPY call spread, it is risky trying to extract further gains from this trade. Unless treasury prices gap substantially lower tomorrow we plan on closing out the TLT spread in the morning.
Couch Potato Trader Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.